BAE Systems and the European Aeronautic Defence and Space Company (EADS) specialise in building products of staggering complexity, with a seemingly infinite number of moving parts. This at least improves their chances of meeting Wednesday's Takeover Panel deadline for thrashing out the terms of an ambitious €35bn (£28bn) merger between the UK's largest defence contractor and the owner of Airbus.

But in this case the challenge is political. Last week saw fresh bouts of upheaval in the corridors of power over a combination of two companies in which the UK, French, German, US and Spanish governments all have close involvement.

The main bone of contention, which the groups hope to resolve this week, is the direct and indirect shareholdings in EADS owned by Paris and Berlin. Neither government wants to dilute its influence over the company – a big employer in France and Germany – if it gives the other an advantage. Both control 22.35% of EADS, but that could be reduced to stakes of 9% each in the new business under one proposal.

The UK state's interest in BAE Systems is represented by a "golden share", which has a symbolic value of £1 and prevents non-UK shareholders from owning more than 15% of the business. That will be converted into a golden share in the new company, but there will be no equity stake akin to France's or Germany's.

This has riled 45 Conservative MPs, who wrote to David Cameron last week warning that he must "safeguard Britain's national security and economic interests". The proposed French and German shareholdings are also a problem, the MPs warned. "It would be naive to think that, if those two governments held a significant shareholding in the new company, they would not continue to meddle."

Despite these concerns, Downing Street seems broadly happy with the deal, and sources familiar with the talks say they have found the UK government less intractable than its counterparts in Paris and Berlin. But that is not enough to ensure that the Wednesday deadline is met, or that the granting of an extension by the Takeover Panel – a relative formality – will bring the parties closer together.

There were reports from Germany last week that intergovernmental talks over the transaction have nearly collapsed. Some non-state shareholders, led by French conglomerate Lagardère, have also questioned its financial merits. If this deal fails, it will have been stifled in the corridors of power.